Bernanke: Recession Over, Indexes Hit Highs

Stocks picked up momentum Tuesday and held on to mild gains after a battery of encouraging economic data added positive sentiment to the prospects of economic recovery.

Also, Fed Chairman Ben Bernanke pronounced an end to the recession in a cautiously optimistic speech but warned that "it's still going to feel like a very weak economy for some time."

The Dow Jones Industrial Average rose 56 points to 9682. The Nasdaq finished up 11 to 2103. The S&P 500 gained 3 to finish at 1053. All three major indexes hit highs for the year.

Retail sales soared 2.7% in August as car dealers received a big boost from the government's "clunkers" rebate program while other merchants fared well in an unexpected sign of consumer resilience. While much of the sales gain came from cars and gasoline, other sales rose 0.6%; that was the second increase in six months within the ex-car, ex-gas category.

"The data is absolutely huge," said Tommy Williams, president of Shreveport, La.-based Williams Financial Advisors. He said the recent stock rally has eased consumer fears in some segments of the population, which was paralyzed a year ago amid the near collapse of the financial system and remained hyper-cautious six months ago.

"I think that everybody was thinking cash for clunkers was carrying the day, and that's absolutely not true," he said. "People have been hoarding cash out of fear, and a lot of that money is in the hands of baby boomers, who love to spend money. This euphoric mood shift has loosened up the pockets of baby boomers who do have cash."

Retail chains are still contending with difficult conditions. The ICSC-Goldman chain store sales index for the week ending September 12 was unchanged from the prior week, but climbed 1.6% from the same week a year ago. That was the strongest increase since September 6, 2008.

Elsewhere, data from the New York Federal Reserve suggested improvement in the manufacturing sector.

Also, U.S. producer prices rebounded sharply last month on the back of rising gasoline and other energy costs, though core prices posted only a slight gain. Price pressures deeper in the production pipeline moved up, as well, suggesting the possibility of higher prices down the road. The producer price index gained 1.7% in August, while core wholesale prices climbed 0.2%.

Gold prices climbed sharply, reaching $1,009 an ounce at 4 p.m.

The dollar rose against the yen and the euro. The British pound dropped after the Bank of England's governor left open the idea of cutting the rates it pays to banks who park money with it.

European markets edged up despite a weaker-than-forecast rise in German investor sentiment. Asian markets were mixed.

Crude futures traded on the Nymex dipped 8 cents in afternoon trading to $70.85.

Dow Jones Newswires contributed to this report.